Top Islamic banker vows to increase interest-free banking share to 15% by 2016

The Islamic banking current share of 8% should grow to over 15% by 2016 in the country through penetration in all potential sectors with innovative Sharia based products and services.

Top Islamic banker vows to increase interest-free banking share to 15% by 2016

Irfan Siddiqui, President & CEO of Meezan Bank expressed his vision while stating the broad growth strategy of Islamic Banking industry and his bank for the next five years.

Meezan Bank, Pakistan’s first and largest Islamic Commercial Bank has completed its 10-year of operations to become the 9th largest bank of Pakistan in terms of branches with a network of 288 in 88 cities across the country.

He further said that the Islamic banking industry in Pakistan has witnessed phenomenal growth over the past ten years. Meezan bank played a vital role in the expansion of Islamic Banking in the country and contributed a tremendous role in overall banking industry.

Pioneer of introducing Islamic banking in the country, Meezan Bank introduced modern Islamic banking in the country with comprehensive portfolio of Islamic financial products and services for Consumer, Corporate segments and Investment Banking, thus catering to all categories of customers by Sharia complaints of banking.

Meezan Bank has also been awarded as the best Islamic Bank in Pakistan by various local and international institutions over the past several years, including ‘Best Islamic Financial Institution in Pakistan’ by Global Finance magazine and ‘Best Islamic Bank in Pakistan’ by Islamic Finance News of RED money Group, Malaysia. The Bank has been rated at A-1+ (A-One Plus), the highest standard in short term rating and maintained AA- (Double A Minus) long-term entity rating with stable outlook by the JCR-VIS Credit Rating Company Limited, an affiliate of Japan Credit Rating Agency, Japan.

Chairman of Meezan Bank’s Shariah Supervisory Board – Justice (R) Mufti Muhammad Taqi Usmani congratulated the management and team of Meezan Bank on this occasion. In his congratulatory message, he said Meezan Bank has done a commendable job, both in terms of developing a wide range of products as well as in extending its outreach to a large portion of the population through constantly expanding its branch network.

URL: http://www.thenewstribe.com/2012/05/28/top-islamic-banker-vows-to-increase-interest-free-banking-share-to-15-by-2016/#.T8R4a7D9Nak

Oman’s Zadjali Says Islamic Banks’ Guidelines Draft Almost Ready

Oman, whose banking industry more than doubled in five years, is close to finishing a draft rulebook for Islamic banking in the Gulf Arab country, said central bank governor Hamud al-Zadjali.

“We are preparing a rulebook for Islamic banking, and the first draft is almost complete,” al-Zadjali said in a phone interview today. The central bank met with local lenders on Jan. 25 to discuss the regulations, he said.

The guidelines won’t be completed before the banking law is amended by mid-year to incorporate lenders that comply with the religion’s ban on interest, al-Zadjali said. Oman approved the creation of two Islamic banks last year, Al Izz International Bank in October and Bank Nizwa in May.

Shariah-compliant banking will allow lenders in the country, home to almost three million people, the chance to tap growth in the global Islamic finance industry. Shariah financing is expanding as much as 16 percent a year and the industry may be valued at $1.5 trillion by the end of 2012, Raj Mohamed, managing director at Singapore-based consulting firm Five Pillars Pte, said Jan. 18.

Islamic banking assets may account for a 10th of Oman’s industry total within 12 months of starting services, Hilal Al Barwani, vice president of banking supervision at the central bank said Jan. 18. Oman’s banking assets jumped to 17.9 billion rials ($46.6 billion) in November from 7.02 billion rials the same month in 2006, according to central bank data.

To contact the reporter on this story: Dana El Baltaji in Dubai at [email protected]

To contact the editor responsible for this story: Claudia Maedler at [email protected]

 

http://www.bloomberg.com/news/2012-02-08/oman-s-zadjali-says-islamic-banks-guidelines-draft-almost-ready.html

Kingdom gaining more clout in Islamic finance

As Islamic finance/banking industry is growing at a sky rocketing growth rate of 12 percent – 15 percent per annum, Kuala Lumpur, Dubai, Bahrain and London are chomping at the bit to become the center of the industry, which currently boasts some $1 trillion in assets.

For the moment, Dubai holds the title of Islamic banking hub – but it could soon lose ground, both to traditional competitors like Bahrain, Kuala Lumpur or London or newcomers on the scene like Singapore.

But the country that really laid the foundation and basic infrastructure of Islamic Finance and paid billions of dollars by establishing the prestigious institutes like IDB, ICD and ITFC etc. and spending billions of dollars over last several decades and deserves to be global hub of Islamic finance and banking is Saudi Arabia.

Saudi Arabia, the Gulf’s largest economy and a G20 country, is the strongest and well-deserved contender for the title and has an edge. Its financial clout and the development of the King Abdullah Economic City strengthens the case.

“The only impediment is that it may not be the easiest place to obtain banking licenses especially now, given the plight of the banking industry in Bahrain and Dubai, but Saudi Arabia has always been very cautious.

The Saudi Arabian Monetary Agency (SAMA) guides and supervises the financial sector – that already made Saudi Arabia the safest haven in the world amid the current debt storm.

It would be a shame to lose this lifetime opportunity in the presence of prestigious institute like IDB, ICD and ITFC being ideally based and headquartered in Jeddah.

These institutes have already produced scores of talented bankers (in Islamic finance) that are spread now in the entire region and beyond and serving the Islamic finance and banking industry.

But this achievement wouldn’t be easy without full government support. With a strike of a degree, this industry could create thousands of jobs for Saudi men and women.

Dubai, despite its liberal policy and religious tolerance, has benefited from government support in creating a regional Islamic finance hub due to a favorable regulatory environment and strong domestic ties to Islam and Shariah.

It has more listed sukuk, than anywhere else.

What’s more, Dubai is cosmopolitan and business-friendly enough to lure talent from far a field.

The industry is not just limited to providing jobs to bankers but a lot of other support industry also flourishes like law offices, Shariah-complaint insurance companies, leasing and mortgage companies etc.

In the absence of any competition from countries like Saudi Arabia, Dubai will continue to be a major driver for Islamic finance in the near term, as it attempts to recycle the region’s petroleum wealth into real estate, tourism, technology and other anchors of a truly diversified economy.

Dubai’s attractions are many. In addition to glitzy and modern shopping malls, it boasts numerous free zones that allows for 100 percent foreign ownership, 100 percent repatriation of capital and profits, exemption from corporate tax and no import duties.

But its central role in Islamic finance isn’t assured over the long haul.

The recent financial crises have severely dented Dubai’s reputation and its financial soundness.

The Islamic finance market, that was once a local affair, deeply rooted in the Gulf region only, is now spread in Far East and Europe and somewhat in the US while Africa still remains a virgin market, offering enormous potential and unlimited opportunities.

Appreciating the potential of this $ 1 trillion and growing industry (expected to reach $2 trillion by 2013), the British government had voiced its determination to issue a sukuk and asked its Finance Ministry to start working on necessary regulatory changes by next year while it issues licenses to Islamic banks.

It has to be noted that sukuk is a $30 billion global industry.

In recent years, Islamic finance has grown rapidly across the world, conservatively estimated at 12 percent a year.

Malaysia has been strong in the Far Eastern market for the past decade. But now, Asian countries – with tiny Muslim populations – are also looking to join this process.

Japan wants to be the first nation in the G-7 to issue a sovereign sukuk bond – that is, if Britain doesn’t get there first.

Among cities outside the Muslim world, London is the strongest Islamic finance center and it leads race to be Shariah capital.

London will give Malaysia and Dubai and the rest of the Islamic world a run for its money, as London has all the strengths of a traditional financial center, from a solid infrastructure to a qualified pool of prospective employees.

Singapore, also seeking to attract Islamic capital, has the same lures but to a lesser degree.

London is already enjoying some success as a focal point for international Shariah-compliant investors, with both corporations and countries listing sukuk bonds in Britain.

London is also benefiting from New York’s relative indifference to Islamic finance, which removes from the race a traditional long-standing rival for global capital because America’s financial capital or political leadership has a narrower appetite for Islamic assets than other centers.

So far New York investors have shown an interest in Shariah-compliant equities, but not in Islamic bonds or Takaful, (Islamic insurance).

Saudi Arabia deserves all credit for its tireless persuasion to make Islamic banking industry in the world.

Saudi Arabia’s task to introduce Islamic banks into conventional banking systems was challenging and tough. Islamic banking is steadily moving into an increasing number of conventional financial systems.

It is expanding not only in nations with majority Muslim populations, but also in other countries where Muslims are a minority, such as the United Kingdom or Japan.

Similarly, countries like India, the Kyrgyz Republic, and Syria have recently granted, or are considering granting, licenses for Islamic banking activities.

In fact, there are currently more than 300 Islamic financial institutions spread over 51 countries, plus well over 250 mutual funds that comply with Islamic principles.

This industry is currently experiencing growth rates of 22 percent per annum despite a tough investment climate – and this growth trend is expected to continue.

This golden opportunity shouldn’t be missed simply because of arrogance or ignorance and this country should get what it rightly deserves.

 

http://arabnews.com/economy/islamicfinance/article569065.ece

Kingdom gaining more clout in Islamic finance

As Islamic finance/banking industry is growing at a sky rocketing growth rate of 12 percent – 15 percent per annum, Kuala Lumpur, Dubai, Bahrain and London are chomping at the bit to become the center of the industry, which currently boasts some $1 trillion in assets.

For the moment, Dubai holds the title of Islamic banking hub – but it could soon lose ground, both to traditional competitors like Bahrain, Kuala Lumpur or London or newcomers on the scene like Singapore.

But the country that really laid the foundation and basic infrastructure of Islamic Finance and paid billions of dollars by establishing the prestigious institutes like IDB, ICD and ITFC etc. and spending billions of dollars over last several decades and deserves to be global hub of Islamic finance and banking is Saudi Arabia.

Saudi Arabia, the Gulf’s largest economy and a G20 country, is the strongest and well-deserved contender for the title and has an edge. Its financial clout and the development of the King Abdullah Economic City strengthens the case.

“The only impediment is that it may not be the easiest place to obtain banking licenses especially now, given the plight of the banking industry in Bahrain and Dubai, but Saudi Arabia has always been very cautious.

The Saudi Arabian Monetary Agency (SAMA) guides and supervises the financial sector – that already made Saudi Arabia the safest haven in the world amid the current debt storm.It would be a shame to lose this lifetime opportunity in the presence of prestigious institute like IDB, ICD and ITFC being ideally based and headquartered in Jeddah.

These institutes have already produced scores of talented bankers (in Islamic finance) that are spread now in the entire region and beyond and serving the Islamic finance and banking industry.But this achievement wouldn’t be easy without full government support. With a strike of a degree, this industry could create thousands of jobs for Saudi men and women.

Dubai, despite its liberal policy and religious tolerance, has benefited from government support in creating a regional Islamic finance hub due to a favorable regulatory environment and strong domestic ties to Islam and Shariah.

It has more listed sukuk, than anywhere else.What’s more, Dubai is cosmopolitan and business-friendly enough to lure talent from far a field.The industry is not just limited to providing jobs to bankers but a lot of other support industry also flourishes like law offices, Shariah-complaint insurance companies, leasing and mortgage companies etc.

In the absence of any competition from countries like Saudi Arabia, Dubai will continue to be a major driver for Islamic finance in the near term, as it attempts to recycle the region’s petroleum wealth into real estate, tourism, technology and other anchors of a truly diversified economy.

Dubai’s attractions are many. In addition to glitzy and modern shopping malls, it boasts numerous free zones that allows for 100 percent foreign ownership, 100 percent repatriation of capital and profits, exemption from corporate tax and no import duties.

But its central role in Islamic finance isn’t assured over the long haul.The recent financial crises have severely dented Dubai’s reputation and its financial soundness.

The Islamic finance market, that was once a local affair, deeply rooted in the Gulf region only, is now spread in Far East and Europe and somewhat in the US while Africa still remains a virgin market, offering enormous potential and unlimited opportunities.

Appreciating the potential of this $ 1 trillion and growing industry (expected to reach $2 trillion by 2013), the British government had voiced its determination to issue a sukuk and asked its Finance Ministry to start working on necessary regulatory changes by next year while it issues licenses to Islamic banks.

It has to be noted that sukuk is a $30 billion global industry.In recent years, Islamic finance has grown rapidly across the world, conservatively estimated at 12 percent a year.Malaysia has been strong in the Far Eastern market for the past decade. But now, Asian countries – with tiny Muslim populations – are also looking to join this process.

Japan wants to be the first nation in the G-7 to issue a sovereign sukuk bond – that is, if Britain doesn’t get there first.Among cities outside the Muslim world, London is the strongest Islamic finance center and it leads race to be Shariah capital.

London will give Malaysia and Dubai and the rest of the Islamic world a run for its money, as London has all the strengths of a traditional financial center, from a solid infrastructure to a qualified pool of prospective employees.Singapore, also seeking to attract Islamic capital, has the same lures but to a lesser degree.

London is already enjoying some success as a focal point for international Shariah-compliant investors, with both corporations and countries listing sukuk bonds in Britain.London is also benefiting from New York’s relative indifference to Islamic finance, which removes from the race a traditional long-standing rival for global capital because America’s financial capital or political leadership has a narrower appetite for Islamic assets than other centers.

So far New York investors have shown an interest in Shariah-compliant equities, but not in Islamic bonds or Takaful, (Islamic insurance).Saudi Arabia deserves all credit for its tireless persuasion to make Islamic banking industry in the world.

Saudi Arabia’s task to introduce Islamic banks into conventional banking systems was challenging and tough. Islamic banking is steadily moving into an increasing number of conventional financial systems.It is expanding not only in nations with majority Muslim populations, but also in other countries where Muslims are a minority, such as the United Kingdom or Japan.

Similarly, countries like India, the Kyrgyz Republic, and Syria have recently granted, or are considering granting, licenses for Islamic banking activities.In fact, there are currently more than 300 Islamic financial institutions spread over 51 countries, plus well over 250 mutual funds that comply with Islamic principles.

This industry is currently experiencing growth rates of 22 percent per annum despite a tough investment climate – and this growth trend is expected to continue.This golden opportunity shouldn’t be missed simply because of arrogance or ignorance and this country should get what it rightly deserves.

http://arabnews.com/economy/islamicfinance/article569065.ece

South Africa all set to introduce Islamic Bonds

Johannesburg: Plans by South Africa’s National Treasury to introduce Islamic bonds are gaining a strong support in the African country, amid expectations the move would help boost the state’s economy.

“I am sure this was at the request of those Middle Eastern countries because SA has a small Muslim population,” Kokkie Kooyman, head of Sanlam Investment Management told Fin24.

The National Treasury has announced plans to introduce Islamic bonds as part of efforts to get a share of the booming Islamic banking industry.

Other financial instruments planned by the Treasury include Mudarabah, a form of investment partnership between banks and businesses that shares the risk and losses.

There is also Murabah, a transaction in which the bank buys the asset then immediately sells it to the customer at a pre-agreed higher price payable by installments.

The Sharia-compliant Islamic finance is not new to South Africa with different banks and investment companies offering these products. Several banks as the First National Bank and ABSA bank offer Sharia-compliant services.

Kooyman said the Sharia-compliant offerings are worth pursuing because the end result or return is the same as that of conventional banks.“The returns are also not much different for ordinary investors,” he said.Islam forbids Muslims from usury, receiving or paying interest on loans.

Transactions by Islamic banks must be backed by real assets — not shady repackaged subprime mortgages and banks cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.

Sharia-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.

Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.Analysts opine that offering Islamic bonds will help South Africa lure investments from the Middle East and the Gulf region.

“If people that have been using Islamic banking have been happy all the time, let us have (more) of it,” Steve Meintjes, a senior banking analyst at Imara SP Reid, told Fin24.The banking expert said the introduction of more Islamic finance products into South Africa would enhance the economy.

“The SA economy needs more finance. Islamic banking will enhance the productive capacity of this economy,” Meintjes said.Tom Winterboer, a banking analyst at PwC, noted that Islamic finance products can be accessible to investors beyond the Muslim population.

“It must be a good thing to happen to South African investors. It is a different principle from the domestic finance we have come to know,” Winterboer said, adding, however, that it needed a different expertise.“But South African banks have this expertise.”

Starting almost three decades ago, the Islamic banking industry has made substantial growth and attracted the attention of investors and bankers across the world.

A long list of international institutions, including Citigroup, HSBC and Deutsche Bank, are going into the Islamic banking business.Currently, there are nearly 300 Islamic banks and financial institutions worldwide whose assets are predicted to grow to $1 trillion by 2013.

Islamic banks profitability up 58% in Q1FY12

KARACHI: The profit of Islamic banking industry (IBI) reached Rs 8 billion by end of the first quarter of 2011-12, showing growth of over 58 percent, as earning’s growth rate of conventional banks having Islamic banking branches is significantly higher than the growth rate of full-fledged Islamic banks.

The study ‘Islamic Banking Bulletin July-September 2011’ released by the State Bank of Pakistan (SBP) revealed that the share of full-fledged banks in overall profit of IBI though declined marginally over this quarter still constitutes major share (55 percent share) of overall profit of the industry.

The growth in profit during the said quarter is relatively lower than the growth rate of the last quarter (100 percent). However, the significantly higher growth rate of the last quarter can be associated to the base effect.

IBI continued its positive trend of earning as indicated by the rising trend in return on assets (RoA) and return on equity (RoE), both these ratios though didn’t show any significant change over the quarter under review for the overall banking industry.

It is also worth noticing that for IBI ‘net mark-up or profit income to gross income’ indicated a decline while ‘non-mark-up or profit income to gross income’ showed an upward trend, which is in contrast to overall banking industry norms.

As of end September 2011, the total assets of the IBI stood at Rs 568 billion, constituting 7.3 percent share of overall banking industry.The deposits of IBI reached Rs 463 billion during the quarter under review and its share increased to 8 percent of the overall banking industry from 7.6 percent in the last quarter (April-June 2011); the yearly basis growth of the deposits was almost 37 percent.

However, investments growth decelerated while financing witnessed retrenchment compared to the previous quarter. The deceleration in growth of investment can be explained by the non-issuance of any new Sukuk during the quarter while the retrenchment in financing is due to the business cycle of most corporate clients as well as the overall economic conditions of the country.

The industry witnessed rising non-performing financing (NPF) during the period under discussion reaching Rs 15.7 billion from Rs 14.8 billion during the last quarter, even so the IBI continued to achieve higher profit and increase in earnings.

The Islamic banking branches’ network increased to 841 branches from 799 as at the close of the last quarter. By opening 42 branches during the quarter the industry also achieved 62 percent of its planned annual branch expansion plan for 2011.

In line with the past trend these additional branches are more concentrated in Punjab (23) and Sindh, which constitute 78 percent share of overall network of the industry. Among banks, Meezan Bank Limited has remained prominent in expansion of its network with an increase of 20 branches during the said period.

However, the industry still seems reluctant in expanding to second and third-tier cities.The assets of IBI reached Rs 568 billion as compared to Rs 560 billion in the last quarter, registering a growth of 2 percent during the quarter under study; the growth is significantly lower than that of the last quarter, SBP report said.

It is important to note that assets of full-fledged Islamic banks witnessed a decline in growth rate from 10 percent in the last quarter to 3 percent in the quarter ended September 2011, while Islamic banking divisions (IBDs) of conventional banks contracted by 1 percent over the period under study in contrast to 17 percent growth in the last quarter mainly attributable to the category of other assets.

The financing of IBIs retrenched by almost 6 percent as it dropped to Rs 177 billion by end of the quarter under study from Rs 188 billion in the last quarter. This fall in financing is in line with the trend of overall banking industry and also with the usual trend of IBIs.

In general the business cycle of most industries including textile (the major shareholder of financing of IBIs) enable industries to retire major portion of their financing in third quarter (from July to September).

This can also be seen by looking at the sector-wise financing of IBI, as the corporate sector that comprises more than 70 percent of the financing recorded negative growth of more than 5 percent. The decline in financing share of industries like textile, sugar, shoes and leather garments etc also support the premise of drop in financing due to nature of their business cycle.

IBI’s investment reached Rs 236 billion in the quarter ending September 2011 from Rs 231 billion in June 2011, registering a growth of only 2.2 percent in contrast to the growth of 19 percent during the last quarter. The lower growth of investment during the quarter is primarily attributable to non-issuance of government of Pakistan’s Sukuk.

However, the available government’s Sukuk in the market remained the major investment avenue for Islamic banking institutions particularly for IBDs. The asset quality of the industry deteriorated marginally with non-performing financing (NPF) increasing from Rs 14.9 billion to Rs 15.8 billion during the quarter under study. The industry witnessed Rs 0.8 billion increase in the category of substandard while Rs 0.2 billion in category of doubtful.

However, this quarterly rise in NPFs is in line with the quarterly growth of NPLs of the overall banking industry. The yearly basis growth rate of 16.8 percent in NPF is lower than that of last quarter, however, the quarterly growth rate (6 percent) is higher than that of the previous quarter indicated by the rising trend of NPFs to financing as well as the net infection ratio.

However, both mentioned ratios are still below than the overall industry average (almost half) hinting at the cautious approach of Islamic banks.Deposits of the industry reached Rs 463 billion by end of the third quarter (September 2011), increasing from Rs 452 billion by end of the last quarter (June 2011).

However, the growth rate witnessed a decline – both annually and quarterly. It is interesting to note that despite the fall in overall growth rate of deposits the category of fixed deposits of customers witnessed a significant rise in its annual and quarterly growth rates from 31.8 percent to 36.5 percent and from 6.3 percent to 7.5 percent, respectively.

Bangladesh banks have weak cushion against risks

Bangladeshi banks’ strength in terms of capital to losses is the lowest among the major South Asian countries, according to the first-ever Financial Stability Report (FSR) released yesterday.

The capital adequacy ratio (CAR), which sets the minimum cushion of capital a bank must keep to absorb losses and promote stability, was 9.3 percent in Bangladesh at the end of 2010. The CAR of Indian banking industry was 14.6 percent as of end-March 2010, 14 percent in Pakistan and 14.9 percent in Sri Lanka.

“Banks’ CAR must increase from the present level,” SK Sur Chowdhury, executive director of Bangladesh Bank, told reporters at the launch of the report.

The CAR has to go up to 14 percent under Basel-II requirements. The major three South Asian countries have more capacity than the regulatory need under the Basel-II.

The BB released the FSR 2010 yesterday at its office. The FSR has checked the health of the Bangladesh financial system and accordingly, advised the banks and non-banks to enhance capacity to absorb shocks.

The report was based on the data of 2010, but it used stress-tests of 2011 to assess the resilience of the financial system to adverse domestic and global macroeconomic developments.

The FSR observed that the domestic financial system remained stable in 2010 despite an adverse international backdrop. Market participants and stakeholders reposed their confidence in the stability of the domestic financial system and stress testing. The FSR, however, pointed out some weaknesses that need to be addressed.

Though the report found a resilient local financial system supported by congenial macroeconomic environment in 2010, it identified a risk arising from the global economic vulnerabilities and its spillover impacts on the economy.

“The financial sector has to make buffer in the wake of a deteriorating global financial condition. The banks should have a liquidity contingent plan,” Chowdhury said.

He cited an example of cash withdrawal during the Eid festivals. “Can a bank remain liquid if it faces 2 percent more withdrawal than that of normal transactions?” he questioned.

He also asked the banks to be more vigilant on the asset-liability mismatch.

The report found banking sector’s balance sheet recorded a sizeable growth in 2010. Assets and loans were not concentrated among a small number of banks. The provision shortfall was also reduced significantly, it said.

Banking industry’s operating and net profit increased by about 47 percent and 54 percent respectively in 2010 than 2009. The return on assets and equity also increased in line with net profit.

Though the non-performing loan ratio has been on a downward trend, the banks have to pay due attention to bring down the ratio to the minimum level, said the report.

The FSR found no big risk in the equity and currency markets during the period under review. However, the local currency was devalued by nearly 15 percent in 2010.

Islamic banks showed a remarkable growth in 2010. Its asset base grew by 27.35 percent, deposits by 25.69 percent and investments by nearly 30 percent in 2010 than 2009. The CAR of five Islamic banks out of seven was higher than the regulatory requirement of 9 percent.

Non-bank financial institutions have also been growing. The total assets of the NBFIs increased by 30 percent in 2010 compared to 2009. The volume of term financing by the NBFIs rose by more than 61 percent in 2010 than the previous year.

However, the non-performing assets (NPA) of the NBFIs increased by over 8 percent in 2010. But provisions maintained against the NPA showed a surplus over required provisions, said the FSR.

The payment and settlement systems in Bangladesh remained resilient and continued to operate smoothly throughout 2010. There was a remarkable shift from paper-based payments to the electronic form, but cash and cheques remain popular, said the report.

On the capital market, the report blamed lower pace of investment activities, reduced interest rates on deposits and savings certificates and over-crowding for the huge flow of capital in the stockmarket in 2010.

http://www.thedailystar.net/newDesign/news-details.php?nid=215837

Islamic banking grows by 30pc

KARACHI: Islamic banking industry maintained strong growth momentum with over 30 per cent average annual growth during the last six to seven years, said Mohammad Kamran Shezad, Deputy Governor, State Bank.

Speaking at the closing ceremony of a five-day training programme on Islamic banking on Friday, Kamran Shezad said that Islamic banking industry at present constitutes about 7.3 per cent of the overall banking in Pakistan.

He said there are five full-fledged Islamic banks and 12 conventional banks having Islamic banking branches with a network over 840 branches in more than 70 districts across the country.

The resilience of Islamic financial institutions during the recent international financial crisis has testified the ability of Islamic economic and financial system to lend the much needed stability to the financial market, which has been experiencing crisis with increasing frequency, he said.

“Encouragingly, post crisis, there has been a significant increase recognition of Islamic finance as a more prudent, stable and better alternate to the conventional system, which gives us the optimism about growth and development of Islamic finance industry at an even higher pace,” he added.

He said the growth trend in Islamic banking industry is likely to gather further momentum with increasing awareness level and expansion of Islamic banking network in second and third tier cities of the country.

“The State Bank has been at the forefront of almost all the initiatives that have been taken to help develop and promote the industry,” he added.

“To address the awareness and misconception issues, we have launched an awareness campaign whereby targeted seminars and conferences are being organised for the business community, academia, bankers and policy makers throughout the country.

Furthermore, a media campaign is being launched for mass awareness using electronic and print media, he added, according to a statement.

http://www.dawn.com/2011/11/26/islamic-banking-grows-by-30pc.html

SBP committed to making banking services easy to access

KARACHI: The State Bank of Pakistan (SBP) is committed to using all the possible means to make the banking services accessible to all segments of the society.

Managing Director, SBP Banking Services Corporation, Qasim Nawaz at the two-day banking exhibition at Gujranwala on Friday highlighted various initiatives taken or being taken by the SBP to facilitate the underserved sectors of the economy in the field of agriculture, SME and microfinance.

The ongoing review of policy and regulatory environment is to promote SME, agriculture and micro finance as a viable and mainstream business activity for banking industry.

SBP is also undertaking review of the existing Prudential Regulations for SME Financing, to develop and separate PRs for “Small Enterprises” & “Medium Enterprises. When implemented, this exercise would facilitate small enterprises’ access to bank credit and consequently raise their share in banks’ loans).

Introduction of Credit Guarantee Scheme for Small & Rural Enterprises (CGS) to share credit risk with banks (upto 40%) with the objective of increasing banks’ lending in neglected sectors/areas. Around 2,000 accounts have been issued guarantee under CGS. An amount of Rs 925 million has been disbursed to small and rural enterprises under CGS and SBP shares risk worth Rs 392.5 million with commercial banks for their lending to this sector.

Introduction of Microfinance Credit Guarantee Facility for resolving liquidity problems for microfinance banks/microfinance institutions. Ten MFBs/MFIs have been provided funding facilities worth Rs 2.8 billion under the scheme by banks.

SBP BSC has provided guarantee cover of Rs 805 million for the lending by commercial banks to MFB/MFIs.

Whereas introduction of refinance scheme for modernisation of SMEs, introduction of refinance scheme for agriculture produce storage construction, crash training programme for the SME and agriculture credit officers of banks. Special capacity building programmes for MFBs/MFIs and Islamic banks are also in the pipeline, launch of eCIB for MFIs to assess the credit worthiness and to avoid over-indebtedness of small borrowers, establishment of SME, agri and microfinance focus groups at BSC field offices across the country to strengthen the consultative mechanism in policy formulation and implementation, initiation of surveys and studies of different regions (furniture industry and rice husking industry surveys of Gujranwala region are planned this year), development of linkages with all the key stakeholders both at country level as well as the district/region level to adopt a collaborative strategy to help/facilitate the entrepreneurs and rural communities in accessing financial services from banks, organising SME, micro, agri and Islamic seminars, workshops, exhibitions and fairs in cities and rural areas in collaboration with banks, SMEDA, and provincial agricultural, livestock departments to create awareness amongst the stakeholders at grassroots level about financial services.

These studies will enable banks and SBP to make their policies, initiatives and products more responsive to the market needs.

Qasim Nawaz expressed hope that the banking exhibition at Gujranwala would go a long way in improving access to finance for the lower segment of the borrowers of the region.

http://www.dailytimes.com.pk/default.asp?page=2011924story_24-9-2011_pg5_2

Dawn in the East: Islamic finance in focus

ISLAMIC FINANCE was a growing sector in the UK before the 2008 credit crunch shook the banking industry. Firms had begun to respond to client demand, recruiting experts in Sharia law and putting in place support networks. Now economies are clawing back, will the area become a focus for accountancy leaders, or does it remain a niche speciality?

The Big Four and top mid-tier firms all have experts ready and waiting to engage with clients on the topic, but it is not clear how much business this generates. People with an interest include those looking to invest in Islamic markets – property in Dubai was hugely popular before the crash – and those hoping to attract finance from cash-rich Sharia-observing countries Continue reading